Energy market for the week: Saudi Arabia upset oil prices

OPEC+'s plans to start increasing production in December and Saudi Arabia's rejection of plans to achieve an oil price of $100 played against the producers themselves this week. Oil has fallen in price and continues to trade in the fork of $ 71-$ 75 per barrel. With gas, the situation is more nervous. Due to uncertainties with transit through Ukraine and competition with Asia for LNG, gas prices in Europe jump by $30 or more at once.

Oil

This week, world oil prices did not hold back again, dropping to $ 71.8 per barrel. Since last Friday, the benchmark North Sea Brent has lost about $ 3. With a daily global consumption of 100 million barrels, this is $ 300 million.

Stock traders, as always, had reasons to play down and vice versa. On the one hand, China's central bank has cut interest rates in an effort to restore economic growth to 5% per year. And in the US, consumer spending has increased, which allows us to count on a new Fed rate cut. On the other…

"Despite aggressive stimulus from China, concerns about oversupply due to OPEC's plan to restore production pushed prices down," Aegis Hedging analysts said, Reuters reports.

Agency sources said that OPEC+ countries plan to start increasing production from December - in the last month of the year it will be restored by 180 thousand barrels.

Expectations that there will be more oil on the market have been strengthened by The Financial Times' information that Saudi Arabia has abandoned the pursuit of oil at $ 100 in order to maintain its market share.

More barrels on the world market will appear before December — from Libya, where rival governments have signed an agreement to end the dispute, and exports can recover by 600 thousand barrels per day — up to 1 million.

The platforms in the Gulf of Mexico are also resuming operation after Hurricane Helen passed.

Gas

Gas in Europe has risen sharply this week. In five working days, quotes have increased by almost 10%. Deliveries for a month in advance at the Dutch TTF hub increased from $ 409 per thousand cubic meters to $ 447.

"There is so much uncertainty about this winter again. How strong will the demand be, how much gas will actually go through Ukraine and what will happen if there is the same growth in demand in Asia?", Rabobank energy strategist Florence Schmit told Bloomberg.

The agency noted that there are now various options for transit through Ukraine on the negotiating table. The Azerbaijani company Socar will be involved, Slovak supplier Slovensky Plynarensky Priemysel AS said. He is looking for partners to continue transit.

"While we consider the gas exchange deal between Russia and Azerbaijan as a long—awaited initiative, the possibility of continuing flows depends on the EU's willingness to take on reputational risk," Rystad Energy analyst Christoph Halser wrote.

The market is also weighing forecasts of an earlier cooling in Europe — in early October. As well as the prospect of competition for LNG with other regions, while in Norway not all fields are taken out of preventive maintenance on time, and in the USA export plants are stopped due to a hurricane.

"Europe is increasingly dependent on supplies from global manufacturing enterprises. Outages at such facilities could lead to an even greater increase in gas prices in Europe," Bloomberg writes.

The rise in gas prices was good news for coal suppliers. The supply of rock fuel from the Antwerp-Rotterdam-Amsterdam hub (ARA) for the month ahead increased from $ 112 per ton to $116.5.